TWICE a year on a Sunday, my local council arranges a hard rubbish collection day. For nosy-parkers like me, its a wonderful opportunity to legitimately rifle through neighbours rubbish as they leave it on the curb for collection.

A few years back, hard rubbish day saw footpaths transformed into makeshift, outdoor lounge rooms as new-looking lounge suites, televisions, lamps, throw rugs and cushions - unwanted, but in pristine working order - were relegated to the street.

This year’s Spring clean out was different.

This year the stuff people put on the streets really was just trash; bits of old wood, broken garden chairs, busted suitcases and soiled mattresses. And there seemed to be less of it.

What changed?

During the property boom of the early 2000s, Australians embarked on a debt-fuelled spending binge. A halving in interest rates since the mid 1990s meant families could afford to borrow twice as much. Banks were more willing to lend.

Supported by rising incomes and low unemployment, we went on a spending splurge. House prices boomed - more than doubling in a decade. Australia’s debt to household income ratio soared above 150 per cent – one of the highest in the world.

During the height of the property frenzy in the early 2000s, one in 12 Australian homes changed home each year (it has since dropped back to one in 25). As we moved, we treated ourselves to a few housewarming presents: new furniture and appliances – all on the plastic, of course.

At the same time, the rise of China meant the price of imported appliances, furnishing and gadgets plummet. We stuffed our homes with them and we kicked our old – but still perfectly good – possessions to the curb.

That was then.

Today, it’s an entirely different story.

The GFC was an almighty wake up call for Australian households. Our love affair with debt had already turned sour in 2006 and 2007 as the Reserve Bank lifted interest rates to eye wateringly high levels to cool the inflation created by all this spending.

When the US investment bank Lehman Brothers collapsed in late 2008, sending shockwaves through the global financial system, households really battened down the hatches. Interestingly, the crisis gave households both the motive – uncertainty - and the means –lower interest rates and stimulus money - to start saving again. We took that first stimulus cheque and have been squirreling away as much savings as possible ever since.

It’s a double whammy for industries like retail and tourism who are also struggling against a high Australian dollar created by the mining boom.

Retailers’ annual revenues grew by about 8 per cent or more during the early 2000s. Spending is now down to around 4 per cent growth a year - more in line with annual wages growth.

But is it only a matter of time before we return to our big spending ways?

I suspect not. All the signs suggest the Australian consumer mindset has changed fundamentally. We have turned our back on debt. More of us are ahead on our mortgage payments. Our credit card balances are shrinking. New loans are down. We are treasuring our possessions once more.

We have become more conservative with our finances. When asked to nominate the safest place for our savings, the proportion of us saying “in the bank” is at a 38 year high. The proportion saying “in shares” is at a record low. National accounts figures suggest households are saving about 12 cents in every dollar they earn, reversing the trend of the early 2000s when we spent more than we earned.

Economists call the trend “deleveraging”. It’s what makes the downturns that follow credit crises so protracted. We want to pay down our debts before we can start spending again.

That is bad new for jobs in the retail and property sectors of the economy, which are likely to remain on the ropes for some time to come.

But it is good for the long term stability of our economy, helping us to build a buffer against uncertain times.

Even if it does make trawling through your neighbours’ trash less rewarding.

$3,299Average credit card balance in July, down 2 per cent (or $69) on the previous month – the biggest percentage fall in 18 years.

15 millionNumber of credit card accounts in Australia – up 1 per cent over the year

35 millionNumber of debit card accounts in Australia – up 6 per cent over the year.

8%Annual growth in retail spending in 2003.

4%Annual growth in retail spending over the year to July.

22%Increase in the value of outstanding home loans over the year ended March 2004 – the peak of new home borrowing.

5%Increase in the value of home loans last financial year.

39%Per cent of Australians who say the wisest place for savings is in the bank – the highest reading in 38 years.

5.5%Per cent of Australians who think shares are the wisest place to put savings – the lowest reading on record.

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